NCC board approves cotton policy position

• Recognizing that future deficit reduction efforts will place unprecedented pressure on the existing program structure, there is concern that simply downsizing the direct and counter-cyclical payment (DCP) programs would likely undermine the effectiveness of the programs to the extent that alternatives must be evaluated to ensure growers have access to the most effective safety net.

From the National Cotton Council | Aug 28, 2011

At the National Cotton Council’s mid-year board meeting in Santa Fe, N.M., the Board of Directors approved an upland cotton policy position for the 2012 farm bill.

The combination of the marketing loan, direct payments (DP) and counter-cyclical payments (CCP), as structured in the 2008 farm bill, has served the cotton industry extraordinarily well and, in recent years, has required minimal federal outlays.

Recognizing that future deficit reduction efforts will place unprecedented pressure on the existing program structure, there is concern that simply downsizing the direct and counter-cyclical payment (DCP) programs would likely undermine the effectiveness of the programs to the extent that alternatives must be evaluated to ensure growers have access to the most effective safety net.

In addition, the cotton industry faces the unique challenge of making program changes that will resolve the longstanding Brazil WTO case.

To respond to these challenges, the industry recommends an adjustment to the current program, which will result in strengthening growers’ ability to manage risk by making an affordable revenue-based crop insurance program available for purchase.

The revenue-based crop insurance safety net would be complemented by a modified marketing loan that is adjusted to satisfy the Brazil WTO case.

In the opinion of the U.S. cotton industry, this structure will best utilize reduced budget resources, respond to public criticism by directing benefits to growers who suffer losses resulting from factors beyond their control, and build on existing crop insurance program, thus ensuring there is no duplication and offering the potential for program simplification.

The full statement is available on the NCC website’s home page, www.cotton.org.